If the government prints a $500 bill and it takes the government $2.50 to print the $500 bill, then the $497.50 net revenue that the government raises is called:
A) a subsidy.
B) a Treasury bond.
C) federal funds.
D) seignorage.

Question

Quizplus · Accepted Answer

The net revenue that the government raises by printing money beyond its face value is called seignorage. In this case, the $497.50 net revenue earned by printing a $500 bill is an example of seignorage.

If the Government Prints a $500 Bill and It Takes